In Emergen-X Pty Ltd (in liquidation) (2010) 28 ACLC 10-028, the Federal Court considered an application by a shareholder of Emergen-X Pty Ltd (Company), brought under section 509(6) of the Corporations Act 2001, for an order to bring forward the date that the Company was to be deregistered by ASIC, following a members’ voluntary winding up. The shareholder, Specialist Pathology Services Pty Ltd (SPS) stood to gain some tax concessions if the deregistration was brought forward by approximately seven weeks.
The company had no creditors and the ATO had given a clearance to the liquidators prior to the final general meeting of the company. ASIC neither opposed nor consented to the application.
In the circumstances, the Federal Court was prepared to make orders bringing forward the date for deregistration.
The Court noted that the period of grace of three months under section 509(5) for ASIC to deregister a company after the liquidator lodges a return of the holding of the general meeting of the company, was designed to permit claims by creditors or other aggrieved parties to be made, so as to ensure that they could make a claim against the company without having to go through the process of seeking an order reinstating it.
The Court found that there was authority for the proposition that the power of the Court under section 509(6) could be exercised where an application was made to bring forward the date of deregistration. The Court noted that if there had been creditors in the offing who wished to bring claims against the company, then that would have militated against the exercise of the discretion. However, there was no evidence of creditors who might bring such claims.
The Court found that there were no considerations of commercial morality that weighed against the exercise of the Court’s discretion. The tax legislation provided the criteria for the entitlement to the tax concessions claimed by SPS, and there was no suggestion of any untoward conduct involved in the making of the application or the claiming of the concessions.
The decision shows that in appropriate circumstances, orders can be made under section 509(6) to bring forward the date of deregistration, on the application of a shareholder, who would miss out on tax concessions if the date was not brought forward. If there was any suggestion that the tax concessions were not properly available, or that the shareholder was not conducting itself in line with commercial reality, then the Court may not have been prepared to make such orders.
For further information please contact Special Counsel, Tim Coyle on 08 9288 6761 or email@example.com.